Whether you’re rich or poor, access to high quality healthcare is something that’s important to all of us. Since it can literally be a ‘life or death’ matter, there is always great debate over the topic and when it comes to health insurance. Generally, we know which side’s for what: Democrats want to see everyone healthy and with insurance(hence Obamacare) and Republicans tend to steer more towards private insurance paid for by individuals and less government assistance.
Personally, I fall somewhere in-between. Living in the greatest country in the world should mean that you can’t die on the streets(and indeed that’s how it is). If I have no insurance and I have life threatening injuries, I’ll be admitted to a hospital, treated and released.
But what about the people who stuffed their faces with hamburgers and fries for 25+ years, refused to exercise regularly and are now becoming a drain on our health care system? I don’t want to pay for them and if they die because they can’t afford a triple bypass surgery to unclog their heart I won’t lose any sleep.
About the Study
The Oregon Health Insurance Experiment is a landmark, randomized study of the effect of expanding public health insurance on the health care use, health outcomes, financial strain, and well-being of low-income adults. It represents the first use of a randomized controlled design to evaluate the impact of Medicaid in the United States. Although randomized controlled trials are the gold standard in medical and scientific studies, they are rarely possible in social policy research. In 2008, the state of Oregon drew names by lottery for its Medicaid program for low-income, uninsured adults, generating just such a randomized controlled design. This ongoing study represents a collaborative effort between researchers and the state of Oregon to use this opportunity to learn about the costs and benefits of this expansion of public health insurance.
Most people are familiar with the government’s two most prominent health insurance programs but while Medicare is for those 65 and over, Medicaid is essentially health insurance for poor people.
This study has come up a lot in the past month on the blogosphere and news cycle. Two years into the study, results have shown that there has been no significant statistical impact found on basic health measures like blood pressure and cholesterol, but did find reduced financial stress and better mental health.
Financial Benefits Are Obvious
It doesn’t take a genius to figure out that health insurance will cause less financial stress. Even though I’m not a huge fan of insurance personally, I think it’s a necessary evil and it does provide a certain peace of mind(especially for people with less money). And in fact, health insurance is the one type of insurance that I think makes sense for everyone to have. If you don’t have car insurance and you crash your car, you can always take the bus or get another ride. But what do you do when you don’t have health insurance and your heart breaks down?
My biggest problem with health insurance though is the fact that you are insuring against things that you know will happen. I know I’m going to go see a doctor once or twice a year so why do I need insurance for that? It doesn’t make sense to add in a third party who will only make things more expensive. Do you think it only costs $20(the cost of a co-pay) to see a doctor? No, the insurance company pays the rest and then bills you for it through your premiums; insurance for every day and routine exams hides the true cost of healthcare.
Insurance Isn’t Enough to Improve Your Health
The most controversial parts of the study were the results that showed Medicaid did not significantly affect the A1C levels of people with diabetes or levels of hypertension or cholesterol. These findings have led many to declare that Medicaid does not work, it is a failed system since it’s not improving the health of it’s participants after two years. Personally, I don’t think two years is enough to make a determination about the validity of Medicare.
Austin Frakt, at The Incidental Economist, notes that non-statistical significance does not mean failure. It means that either there is no treatment effect or the study is underpowered. Blood pressures did fall in the study, but the amount they fell by wasn’t statistically significant. He suggests that aybe these health measures could have been shown significant with a larger sample size.
Preventative Healthcare Matters More
Over time, I think the results of this study will show that Medicaid will improve participant’s health but I don’t necessarily think just having insurance prevents healthcare problems. I don’t know why we aren’t focusing on preventative care like eating healthy, exercising regularly and so on. It would be a lot cheaper to hire a bunch of nutritionists and personal trainers to whip people into shape than it is to have to pay for a cardiologist to go in and do a complicated surgery down the road.
Unfortunately, government tends to be the last one to adapt. I look to the private sector for change first and I don’t have to look far. My own company is a huge proponent of health and wellness. They actively encourage all employees to go for walks during lunch, provide two on site gyms, have wellness fairs and even monetary incentives for setting health goals, getting a biometric screening and taking a health survey. Now what is their motivation behind all this? While I’d like to think they want to employ a happy and healthy workforce, the answer is more likely money. They see that there is a huge cost savings when you have a healthy workforce that doesn’t need to see their doctors very often. My employer takes a preventative approach now so that down the road they can negotiate cheaper plans for the company’s bottom line. That’s good business.
I think health insurance for all is a good thing and although there are definitely some tweaks that need to be made here and there we’re on the right track. I’m still hoping that HSA’s will catch on and employers, employees and governments will realize the benefits of being able to shop around for healthcare services much like you would with other services. Until people actually have to see the cost of the services they are receiving, there won’t be much change though.
Readers, do you think Medicaid is a flawed system? What are your thoughts on the Oregon Public Health Study?
I didn’t want to dive too deep into the statistical side of the study but there are some really interesting facets of discussion if you consider yourself a stats geek and words like power and statistical significance mean anything to you. Here are some more resources if you’d like to learn/read more about the study and it’s results:
Track All Your Accounts With Personal Capital

- Oregon Health Insurance Experiment
- Econ Talk Podcast: Frakt on Medicaid and the Oregon Medicaid Study
- Oregon and Medicaid and Evidence and CHILL, PEOPLE!
-Harry @ PF Pro
I must disagree with the idea that “you’re insuring against things you know will happen”. Insurance is more for the unknown…since THOSE are the expenses that will bankrupt you. Preventative care is important to maintaining overall health, however, even if someone cares for themselves impeccably they could face issues that are hereditary. They could also face things way out of their control…like getting hit by a bus. I personally know of two young healthy men that played sports and as required in school years, visited the doctor for annual physicals. Despite having perfectly healthy habits, exercising regularly and no family history, they both dropped dead before age 20 of cardiac myopathy. (No drugs or alcohol were involved either) It does happen.
The origin of insurance goes back to days when a village would all contribute and put aside a little bit extra of what they harvested, and “money” they earned. When one of the men would die, those stores were used to feed his family until they could manage their farms.
I think the governments involvement is going to be a bad idea…they have proven in SO many ways that they are incapable of managing other people’s money properly.
I DO love my HSA plan! When I compare what the deductible and out of pocket maximums were on the HSA vs the other option it was $2000 higher on the HSA plan. However, the premium for the other plan was more than $2000 higher! I rather have more control over how my dollars are spent.
Sorry I should have made myself a little more clear. I don’t mind catastrophic health insurance but over 90% of people don’t have that. They have traditional insurance that requires some type of co-pay just to see the doctor. The problem with this system is that you don’t know how much you’re paying for a simple check-up. Most employers pay for a majority of your monthly premium so that makes it even harder to figure out what you’re true cost is.
You know the basic lab work you get when you go in for a physical that your doctor charges your insurance hundreds of dollars for. You can shop around and get those exact same lab tests through online companies for as low as $26!
I’m not sure if the government’s involvement will be bad or good but I don’t think there’s many who would disagree with the fact that our health system is broke(or breaking), it’s getting more expensive and becoming harder to gain access.
A complicated question because it matters what it means for Medicare to “work.”
Did it work at getting beneficiaries medical services?
Yeah, looks like they used it and used it intelligently. This was despite fears that no doctors in Oregon would take Medicare from these newly enrolled folks. That’s worth something, at least.
Did it work at getting better health outcomes?
Still inconclusive at this point. Like you said, prevention (and what I think is more important — finding and treating diseases early) could yet be shown to help quite a bit.
One interesting fact: 80% of health care spending in the U.S. is spent on patients in their last six months of life.
Why would no doctors accept Medicare? I have read a lot of articles that say even though doctors complain about the low prices they receive for Medicare patients they need them since the gov. pays so promptly.
I think prevention should be stressed way more but it’s hard for people to think long term vs. short term. I didn’t know about that 80% fact, have a reference for that?? haha 🙂
Sorry. The 80% is two different stats mushed together. 80% of healthcare spending comes from 20% of the population (largely at the end of life, but a not insignificant amount for babies). Somewhere between 25% and half (depending on the study) of Medicare spending (never mind the uninsured or those insured through some other means) goes toward those in their last year of life.
I have heard that about Medicare too. Another reason could be that there are so many people on Medicare that doctors would lose too much volume, even if they’re making more per patient.
That doctors would not accept Medicare patients was one of the big arguments people tried to use against its nationwide expansion. Search your news websites for something like “Doctors flee Medicare.”
You make some decent comments, here, but I must push back on a couple. For example, suggesting that “Democrats want to see everyone healthy and with insurance” suggests that non-Democrats want to see everyone unhealthy and without coverage, even with the suggestion that “Republicans tend to steer more towards private insurance paid for by individuals and less government assistance.” Do you proof these posts before you submit them? I’m neither a Democrat nor Republican, so how would you generalize my position?
Also, your suggestion that, “health insurance is the one type of insurance that I think makes sense for everyone to have” suggests you don’t think insuring against disability, death, house fire, theft, etc makes sense. Further, the comment that, “If you don’t have car insurance and you crash your car, you can always take the bus or get another ride” completely neglects that auto insurance mandates aren’t intended to protect the insured; they’re intended to protect the poor guy you hit with your car!
While I completely agree with your admiration of HDHP/HSAs, and am published on that subject, some of the statements made in this post are troubling and give me pause about the source.
If you’re agreeing with me on 1 of 3, I’m batting .333 so I’ll take it, haha! I think my generalization of democrats and republicans is pretty spot on though. Republicans might not say it outright, but who loses when insurance is privatized and there is less government assistance? Poor people.. Or am I missing something? If I had a catastrophic event, I could cash out everything and come up with 200k to cover an emergency but I have insurance. Poor people can’t do that and if you give them the option not to buy insurance they won’t.
Insurance is a necessary evil to me, and if I had the option I would not insure my car. Can’t you get insurance against uninsured drivers if that’s something you’re worried about?